New markets

Entering new markets means selling to groups of customers a business does not already reach. It is a way of achieving organic growth, because the business expands using its own resources rather than joining with another business. A new market is not only a foreign country.

Two types of new market

• A new customer segment in an existing market: the business keeps selling in the same country but targets a different group of buyers. For example, Harbour & Co, a Bristol maker of reusable water bottles, launches a smaller, tougher bottle aimed at primary school children and sells it through schools. The customers are new even though the product and country are familiar.
• A market in another country: the business starts selling to customers overseas. For example, Peak Trail, a Manchester brand of walking boots, begins selling in Canada, where cold, wet weather creates similar demand.

Reaching these customers often means adapting the marketing mix, such as changing the price or the way the product is promoted, and using technology, such as a website that lets customers order online, including from abroad.

Why it can grow sales, and why it is risky

Expanding overseas can increase the number of potential customers, so sales may rise well beyond the sales possible in the home market, especially if demand at home is flat.

Entering a new market can be expensive and risky. For example, expanding overseas means research, translating packaging, meeting different laws and setting up distribution, all of which cost money before any sale is made, and the money may be lost if customers do not buy. A business may also misunderstand customer needs, because tastes, habits, incomes and religions differ between countries, so a product that sells well at home can fail abroad. Peak Trail might find Canadian buyers prefer a different style of boot, leaving stock unsold.